Correlation Between BMO Mid and CI Canadian
Can any of the company-specific risk be diversified away by investing in both BMO Mid and CI Canadian at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BMO Mid and CI Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Mid Corporate and CI Canadian Convertible, you can compare the effects of market volatilities on BMO Mid and CI Canadian and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BMO Mid with a short position of CI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Mid and CI Canadian.
Diversification Opportunities for BMO Mid and CI Canadian
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BMO and CXF is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BMO Mid Corporate and CI Canadian Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canadian Convertible and BMO Mid is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BMO Mid Corporate are associated (or correlated) with CI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canadian Convertible has no effect on the direction of BMO Mid i.e., BMO Mid and CI Canadian go up and down completely randomly.
Pair Corralation between BMO Mid and CI Canadian
Assuming the 90 days trading horizon BMO Mid Corporate is expected to generate 0.4 times more return on investment than CI Canadian. However, BMO Mid Corporate is 2.47 times less risky than CI Canadian. It trades about 0.13 of its potential returns per unit of risk. CI Canadian Convertible is currently generating about 0.05 per unit of risk. If you would invest 1,345 in BMO Mid Corporate on September 12, 2024 and sell it today you would earn a total of 232.00 from holding BMO Mid Corporate or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Mid Corporate vs. CI Canadian Convertible
Performance |
| Timeline |
| BMO Mid Corporate |
| CI Canadian Convertible |
BMO Mid and CI Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Mid and CI Canadian
The main advantage of trading using opposite BMO Mid and CI Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Mid position performs unexpectedly, CI Canadian can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CI Canadian will offset losses from the drop in CI Canadian's long position.| BMO Mid vs. iShares Core Canadian | BMO Mid vs. Global X Active | BMO Mid vs. iShares 1 10Yr Laddered | BMO Mid vs. RBC Target 2026 |
| CI Canadian vs. iShares Core Canadian | CI Canadian vs. BMO Mid Corporate | CI Canadian vs. Global X Active | CI Canadian vs. iShares 1 10Yr Laddered |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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